While contracts need not be in writing to be binding, there are three elements that must be a part of any agreement—written or oral—to be considered binding and enforceable in Arizona.
One party creates an offer by proposing—either in writing, verbally, or sometimes mere actions—an exchange of something of value (typically goods or services) for something else of value (typically money). The offer must contain:
- Wording to the effect that the offering party intends to form a contract;
- Specific terms describing the offer
- Identification of the party making the offer
The party to whom the offer is made must accept it in order for the contract to be binding. Acceptances can be written, oral, or indicated by specific actions. If the offer is accepted, the acceptance is considered to be a complete consent to the terms proposed. Only the party to whom the offer is made can accept unless he or she has designated an agent to act on their behalf. If changes are suggested, the initial offer is considered to be rejected and a counteroffer proposed. At this point, there is no binding contract and both parties are considered to be in contract negotiations.
No contract is complete without the inclusion of consideration, which is an exchange of items of value between the two contracting parties. Considerations may consist of money, services, stock, promissory notes, intellectual property, or other tangible items of value. There are no limits on these exchanges unless they are illegal or involve criminal activity.
In addition to the above three elements, the contracting parties must be legally competent. Minors and those with limited mental capacity are not considered to be competent; in some cases, if one party accepted a contract under the influence of drugs or alcohol, that may be considered unenforceable.
When contract disputes arise, you need experienced legal representation and advice. Williams Commercial Law Group, L.L.P., is a law firm focusing on contract litigation, and business divorce. Contact us at (602) 256-9400 and schedule a time to meet with us today.